4 Cannabis Investors Share Their Predictions For Industry's Future

Wall Street will be doing billions of cannabis business in the next two years.

That’s according to Danny Moses of Moses Ventures, who joined an investor panel moderated by CNBC contributor Tim Seymour at the 2019 Benzinga Cannabis Capital Conference, a two-day gathering of C-Suite executives, investors, thought leaders and other representatives from some of the most intriguing public and private companies in the space.

Moses, one of the traders highlighted in Michael Lewis’ “The Big Short,” said he initially became interested in cannabis by looking for companies to short.

The more research he did, the more bullish he became.

“The wellness aspect of hemp/CBD is the most exciting part of it,” he said. “I mean it works for epilepsy — how many things do you hear about that actually work scientifically? So I’m about the wellness application for it. I’m excited that 80 years of bad laws are being turned over. I think it’s exciting and I think we’ll see a lot of deals.”

The STATES Act

A common discussion point of the day was the Strengthening the Tenth Amendment Through Entrusting States Act, or STATES Act. 

The bill, which could get pushed through Congress this year, would allow states to regulate their cannabis laws without the federal government's involvement.  

“The STATES Act, whatever it contains, it sounds almost like it’s the cure-all,” Seymour said. Not everyone agreed.

“It’s completely crazy. Women wouldn’t have come up with these rules, I’ll tell you that much,” said Jeanne Sullivan, general partner at Arcview Ventures. “Let’s fix the banks [first]. This is the dumbest thing going, that we don’t have real banking that can handle these products. Let’s fix that first.”

Sullivan said she believes the Trump administration will remove cannabis from the DEA's Schedule I list. 

“It’s going to get pulled off the Schedule I. There’s no doubt in my mind or with any of us who follow this hour by hour. So that’s going to pull things along, but let’s get banking done first.”

'The Wall Of Capital Is Coming'

Now is the time to focus on growth and expansion in the U.S., according to Sean Stiefel, portfolio manager at Navy Capital

“The [valuations] are way too low," he said. “Your mom, sisters and brothers will be able to name brands by this year." 

Social equity will be a big-ticket issue in cannabis, especially with celebrities, Stiefel said. 

MTech Acquisition Corp. MTEC CFO Tahira Rehmatullah projects that the trend of consolidation in the space — there were 350 cannabis M&A deals in 2018 — will continue in 2019.

In her view, ancillary companies, especially ones that can increase efficiency and yield, will be the most sought-after.

“It makes sense, because everything has been so fragmented for so long," Rehmatullah said. “Companies are starting to seek where they have logical alliances that make both companies better and make economies of scale where everybody was trying to shoulder the burden by themselves before.”

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